How Much Does a Co-Packer Cost? Quotes Compared

A co-packer costs a fee for each unit it makes, a setup fee for each run, and the minimum run it insists on, plus freight both ways and storage while the run sells. The fee per unit is the number on the quote; the minimum is the number that decides what you pay. In the example below, a hot sauce brand selling 2,000 bottles a month compares making it itself, at $2.26 a bottle, with three quotes: a small toll co-packer at $2.07, a turnkey co-packer at $2.20, and a large co-packer at $1.71 that needs $30,300 up front and ten months to sell the run. Below is what goes into a quote, the four options side by side, what the cheapest bottle really costs, and a free calculator.

The short version

• Add every part: fee per unit, setup per run, ingredients, packaging, freight in and out, storage.
• The minimum run decides how many you pay for, not how many you need.
• Divide by the good units, after the loss allowance.
• Count the cash out before the run sells, and how many months it sits.
• Compare against making it yourself at an honest wage for your hours.
• A low fee per unit with a high minimum can cost more than it saves.
• TaroStack keeps track of what's at your co-packer, by lot, as a site of its own. More below.

What's in a co-packer's quote

How a co-packer arrives at its fees is in co-packing fees.

Four options side by side

Blue Ridge Hot Sauce, a made-up hot sauce maker in Roanoke, Virginia, I use in these examples, sells about 2,000 five-ounce bottles a month:

Making it itself, Blue Ridge rents a shared kitchen for $300 a run and pays two people $20 an hour to fill 60 bottles an hour: 67 cents of labor a bottle, two nights a month. The small toll co-packer saves 19 cents a bottle, about $380 a month at 2,000 bottles, and frees those nights. The turnkey co-packer costs more a bottle than the toll one, but buys the peppers and glass itself, so Blue Ridge never has to order a pallet of bottles. How a brand decides when to move out of the kitchen is in co-packer vs commercial kitchen.

What the cheapest bottle really costs

The large co-packer's $1.71 is the lowest cost a bottle by 36 cents, and the wrong choice for Blue Ridge today. Its 20,000-bottle minimum is ten months of sales: $30,300 paid before the first case sells, $3,560 of storage while it sits, and ten months of risk that a flavor stops selling or a label has to change. The 36 cents saved on 19,800 bottles is about $7,100, against $20,000 more cash tied up for most of a year. When Blue Ridge sells 8,000 bottles a month, the same quote is ten weeks of sales, and the large co-packer is the obvious one. A co-packer's minimum suits a brand's sales, or it doesn't. How minimum orders work on both sides is in minimum order quantity.

The costs quotes leave out

• Your time on the first run: a pilot batch, sign-off samples, a trip to watch it.
• The process authority's review for each recipe, if the product is acidified; see process authority letter.
• Packaging minimums of your own: a co-packer with a 5,000-bottle minimum needs 5,000 labels, and the printer's minimum may be 10,000.
• Changes: a new label or bottle size can mean a new setup, and the old stock written off.

Get the calculator

Download the co-packer quote calculator. One column for each quote and one for making it yourself: type the run you'd order, the minimum, the loss, the setup, the fee or your labor, ingredients, packaging, freight and storage, and the run's cost, the months it takes to sell at your sales a month, the storage while it sells, the cost of each good unit and the cash out before it sells fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Once the co-packer is chosen, the work moves to keeping track: peppers and bottles shipped to Lowell, runs made there, cases on the co-packer's shelves and in your own warehouse, labels running low before the next run. A quote sheet can't say how many of your bottles are at the co-packer, or which run the cases in a store came from.

How TaroStack does it

TaroStack keeps track of what's at your co-packer, by lot, as a site of its own.

The co-packer as a site. Your co-packer's premises can be a site of their own, so the peppers, bottles and labels you send are a transfer, shown in transit until they arrive, and what's on their shelves is counted as yours, at their place. More than one site is on Standard at $99 a month.

Their runs as batches. Each run is a batch at the co-packer's site that takes your materials off stock there and gets a lot, so the cases that come back carry the run's lot, and a recall report shows which stores got them.

What to send next. Labels, bottles and mash come up on the reorder list in days of cover, with each supplier's lead time, so the next run's materials are ordered before the co-packer asks. How that works across places is in multi-location inventory.

Sites, transfers, batches and lots are on Standard at $99 a month for more than one site. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

How much do co-packers charge per unit?

It depends on the product, the run size and who supplies the materials. In the example, toll fees run from 35 to 60 cents a bottle, and a turnkey co-packer charges $2.10 a bottle all in.

What is a co-packer's minimum order?

The fewest units they'll make in a run. In the example, 2,500 bottles at a small co-packer and 20,000 at a large one.

Is it cheaper to use a co-packer than make it yourself?

Often, per unit, once your own hours are paid at an honest wage. In the example, a small co-packer saves 19 cents a bottle against making it in a shared kitchen.

What costs do co-packer quotes leave out?

Freight, storage after the free period, pilot batches, process reviews, and your own packaging minimums.